2017-11-30 00:00:002017-11-30 00:00:00https://quickbooks.intuit.com/ca/resources/business/small-business-closure-leaving/Running a BusinessEnglishKnow the options for leaving your business now or down the road to ensure that you maximize your financial rewards and minimize your risks.https://quickbooks.intuit.com/ca/resources/ca_qrc/uploads/2017/12/Small-business-owner-holding-camera-discusses-options-for-leaving-business.jpghttps://quickbooks.intuit.com/ca/resources/business/small-business-closure-leaving/What Are My Options for Leaving My Business?

What Are My Options for Leaving My Business?

3 min read

3 min read

Know the different ways to leave your business to maximize your advantages. Choosing the best exit strategy lets you get the greatest financial rewards while minimizing risk and hassles for yourself and your heirs. Some methods even let you maintain an interest or participation in the business while reducing your commitment of time and other resources.

Sell It

If you believe that your business has growth potential but you’re just not interested in growing it yourself, consider selling it. Find someone skilled in operations who can take it to the next level. Finding a buyer can be challenging if your business is new, small, or unprofitable, but the greater the growth potential, the easier it is to find a buyer.

You’ll need to share a lot of information about your business with potential buyers, including financial statements and tax returns going back at least three years; lists of assets, inventory, employees, and customers; details about outstanding loans, debts, and leases; and the names of outside professionals, such as advisers, lawyers, and accountants, who are familiar with your business. A variety of internal and external factors determine the value of your business and timing the sale can be crucial to getting the best price.

Turn It Into Your Cash Cow

Is your small business providing you with a steady stream of revenue? Will it continue to do so if you turn over the reins to someone you trust? If so, you might want to retire or move on to your next project while keeping ownership of the business and taking profits or a salary. This allows you to keep your baby intact and often entails less risk than other options.

For example, if your business has an established customer base and sells products or provides services that don’t require constant innovation and change, it could be relatively simple and low-risk to hire a competent manager to manage day-to-day operations. You can then spend your time on other things while making yourself available as a consultant or adviser.

Merge It With Another Business

If your business serves a market that’s similar to that of another business, consider merging with it. Larger businesses looking to grow often want to buy small businesses to increase their market share, round out their pool of talent, or otherwise leverage whatever your business has to offer. This can be a great way to cash out with relatively little risk or hassle on your part.

Take It Public

Taking your business public with an IPO — an initial public offering of your company’s stock — is another option. The process is complex and can be expensive, and you and your business will be closely scrutinized by various interested parties, including accountants, lawyers, regulators, industry experts, and the media. Your potential liability is high, but if your company is well positioned for an IPO, experts will guide you through the process. You could reap a large profit while keeping some ownership for yourself.

Liquidate It

Sometimes it’s best to just dissolve a business. Liquidation can be the right choice in the event of bankruptcy or a collapse in revenue or profitability due to some unforeseen external event, such as an environmental catastrophe or major regulatory change. How you go about shutting the doors depends largely on your business’s legal structure; particular legal and tax considerations apply to each type of structure.

Even if you’re not looking for an exit now, it’s a good idea to have an exit strategy for down the road, especially if you have an innovative product that could make your business an attractive candidate for outside investment or purchase.

Information may be abridged and therefore incomplete. This document/information does not constitute, and should not be considered a substitute for, legal or financial advice. Each financial situation is different, the advice provided is intended to be general. Please contact your financial or legal advisors for information specific to your situation.